Magic still doesn’t happen
by Amy Castor and David Gerard
https://www.youtube.com/watch?v=fy9P7CN-atM&list=UU9rJrMVgcXTfa8xuMnbhAEA - video
https://pivottoai.libsyn.com/20261106-tech-stocks-crash-and-so-do-data-center-loans - podcast
time: 6 min 35 sec
It’s a Dutch bank, the Dutch pension scheme is in the process of moving from a benefits defined pension scheme (payment known upfront) to a contribution based pension scheme (payment being based on returns). Hence their pension funds have primarily held bonds, that’s changing as historical returns on stonks have been higher.
Whether ING has any pension related holdings, no clue. But that right here could very well be the reason. It’s also the single biggest factor for why the bond rates are rising globally. It’s estimated to impact about 3TN € worth of capital on the European bonds market, once the transition is in full effect next year
That’s interesting, thanks! Not exactly sure where the dc loans fit in the benefits vs contributions scheme, but I guess it’s important context to keep in mind if reading further into this.
The primary difference between a bond and a loan, are the installments. A loan will gradually be paid off, whilst a bond will pay interest yearly and then one installment upon expiration.
So from a return perspective, they’re both having a fixed return and therfore fits defined contribution schemes nicely. As they can sort of guarantee they’ll have the money they’ve promised the pension holder 10 or 30 years down the line